Chart of the Day: Italian bonds

Today’s charts come from an illustrative post from TF Market Advisors (via Zero Hedge), and shows the 5 year yield on Italian bonds, the Credit Default Swaps (CDS) and the spread between the former and the 5 year German Bunds:


  1. I wonder if the ECB is still buying Italian debt. The 10-year yield has shot up a bit lately too.

  2. I think they, and they will probably start buying more soon if the yield goes up further. The market is catching up to my bewilderment with this Europe Debt Plan. There is no quick fix. A 50% haircut won’t save Greece but will hurt credit availability. And if it takes several months to implement a stupid plan, then it would never be good enough.

    The trouble with any plan to increase the bailout fund will probably run into a lot of opposition, first of which will be the German constitutional court which won’t allow more money to be given out without another set of Parliamentary votes. I would expect many countries to oppose having their liabilities increased without any say in the matter.

    The ECB should have just shorted Greek bonds ages ago. If they had, they would have a substantially higher ability to bailout anyone now.

    • I find this interesting. How long can the ECB continue buying bonds when its mandate does not allow outright QE?

      • Who does the ECB answer to when they break their own rules? No-one. They can do as they please. No court would ever rule against their actions and be deemed responsible for a market collapse.

        As I’ve said before. They will do anything and everything, at any cost to kick the can down the road. While I can’t imagine it, I’m sure they will think of yet more creative and destructive ways to keep doing this as time goes by.

        Oh and as always, the leaders and those responsible for the malaise will get away without consequence while everyone who isn’t rich will suffer for years to come.